QSpex Technologies Inc. plans to add more than 120 jobs as the prescription lens technology startup expands manufacturing and launches new products.

Alpharetta-based QSpex has developed a process that involves a liquid plastic that, when exposed to certain wavelengths of light, is converted into a hard plastic lens. Using its technology, QSpex claims, eye-care specialists can make high-quality lenses in about 35 minutes, versus the typical three- to seven-day turnaround.

“We’re putting the control back in the hands of the doctors — control of quality, control of service levels and control of their costs,” QSpex CEO Stephen Martin said.

The 120 new jobs — to be added over the next 18 months — will be split between manufacturing and sales and marketing.

QSpex has a 16,000-square-foot manufacturing area in its 56,000-square-foot headquarters building in Alpharetta. The facility includes a “clean room,” where lens coatings are applied to disposable plastic molds. QSpex plans to invest $4 million in the plant as it boosts production and is considering adding 26,000 square feet of warehouse space.

“We’re expanding primarily the anti-reflective coating manufacturing,” Martin said. “We find that the demand for our product that has the anti-reflective coating treatments on it, is much greater than we originally thought.”

QSpex also plans to double manufacturing capacity at its 54,000-square-foot plant near Shanghai, China.

QSpex’s Alpharetta plant primarily does R&D and prototype manufacturing. Once the process has been refined, some of the production is shipped to lower-labor-cost Asia.

The company maintains U.S. and Chinese manufacturing operations as a hedge.

“After the tsunami hit ... in Japan, it made it really clear to us that putting all our eggs in one basket is not a good idea,” Martin said. “We’re doing duplicate facilities just in case something happens to one of the facilities.”

Growth strategy

Mass adoption of QSpex’s technology will hinge on the costs savings it delivers, said Nima Samadi, analyst at IBISWorld Inc. QSpex’s technology typically delivers a 30 percent to 50 percent reduction in lens-making costs, compared with conventional optical lab costs, according to the company.

“Although having quick turnaround is a nice convenience,” Samadi said, “it’s not a necessity for most customers.”

Founded in 2007, QSpex’s technology was developed by Kai Su, who spent two decades leading research and development groups at CIBA Vision Corp., Alcon Laboratories and Bausch & Lomb Inc.Su is QSpex’s founder, chairman and chief scientific officer.

The company recently entered the polarized lens market and plans to expand into the photochromic lens market this fall.

The market share leader, Transition Optical Inc., does $500 million in sales annually, he said.

The polarized market, meanwhile, has significant growth potential because by using the QSpex technology, the doctor can sell a second pair of high-quality polarized glasses along with the patient’s regular prescription lenses at a more cost-competitive price, Martin said.

QSpex is chasing the high margin share of the $2.7 billion eyeglass business. About 81 million pair of prescription lenses are sold in the United States annually. The corner of the prescription lens market that QSpex is playing in accounts for nearly50 percent of sales volume and about 70 percent of revenue.

For QSpex , the barriers to entry — financial and otherwise — are high.

The company is in a capital-intensive business, with high startup and rollout costs, Samadi said.

QSpex also deals with a lengthy sales cycle. Getting eye-care specialists to buy into the technology will be a challenge, because it requires a change in the way business gets done.

The startup must take on established brand-name lens manufacturers and optical labs, from whom eye-care specialists have traditionally sourced.

“Ultimately, the question is, is the value proposition for this [technology] that high that they would consider abandoning existing [vendor] relationships,” Samadi said.

QSpex lenses are harder to justify financially for low-end, single-vision lenses, which can be sourced from optical labs for $15.

QSpex’s market could also be limited — at least in the short term — because some insurance carriers require eye-care specialists to source lenses from wholesale labs, with whom the insurers have contracted. QSpex is working on expanding the number of insurers who cover thecompany’s lenses, Martin said.

Urvaksh Karkaria covers Technology.

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